The Supreme Court Has Temporarily Halted the Appeals Tribunal’s Decision Over the BYJU'S-BCCI Settlement

Nitin Konde, Bhoraniya Huda Hifzur Rehman

Aug 15, 2024 — 3 min read

The Supreme Court Has Temporarily Halted the Appeals Tribunal’s Decision Over the BYJU'S-BCCI Settlement

On Wednesday, the Supreme Court issued a stay of the NCLAT ruling that had set aside the insolvency proceedings against the ed-tech major. This effectively enabled Byju Raveendran, the owner of the company, to regain control of the business.

The ruling of the NCLAT that approved the settlement of Byju's dues with the BCCI amounts to INR 158.9 crore, but the highest court has placed that verdict on hold. This decision has put a strong blow on Byju's.

The order was issued in response to a pleading by Glas Trust Company LLC, a creditor situated in the United States, against the verdict of the NCLAT. Glas Trust Company LLC asserts that they are owed one billion dollars by Byju's.

Additionally, a panel that was led by Chief Justice DY Chandrachud ordered the Board of Control for Cricket in India (BCCI) to maintain a separate account for the INR 158.9 crore that it had received from Byju's as a result of a settlement.

Insolvency proceedings against BYJU'S were halted on August 2 after the National Company Law Appellate Tribunal (NCLAT) gave its approval to the settlement of INR 158.9 crore in dues with the BCCI.

How This Decision Can Bring More Trouble for BYJU’S

Following the decision of the Supreme Court, the insolvency proceedings against BYJU'S will resume. This will result in the ed-tech major, which was previously valued at USD 22 Billion, being placed under the control of an insolvency administrator chosen by the court.

At the beginning of this month, Byju Raveendran was able to restore control of the company after the National Company Law Appellate Tribunal (NCLAT) dismissed the insolvency procedures that were being brought against the startup.

The cricket regulating body of India filed a complaint, stating that the company had not been paid its sponsorship dues, which resulted in the company being placed in the process of going bankrupt. After some time, the two parties reached a settlement on the issue, and an appeals tribunal put a stop to the insolvency procedures.

Why BYJU’S Is Going Through a Financial Crunch?

The fast growth and forceful strategy of acquisitions employed by BYJU'S have put a heavy burden on its financial resources. Many are worried about the company's long-term viability because of its substantial need for outside finance, despite the fact that it has raised billions in cash.

Despite the initial boost to online education caused by the COVID-19 pandemic, the market became saturated, which affected Byju's growth trajectory.

Misleading advertising, unauthorised charges, and trouble getting your money back are just a few of the customer service issues that have plagued Byju's. Not only have these problems damaged the company's image, but they have also prompted lawsuits.

Members of the Enforcement Directorate and the Ministry of Corporate Affairs (MCA) are among the regulatory agencies that are constantly monitoring the operations of the company.

Investigations have been initiated due to allegations of financial irregularities, such as disparities in revenue recognition and possible violations of the Foreign Exchange Management Act (FEMA).

At the heart of both the company's success and its present problems has been Byju Raveendran, founder and CEO of Byju's. Now that stakeholders and investors are demanding answers about the company's performance, his leadership is under scrutiny.